Oil prices have been U-shaped this week. They hit a high of $54 midday Monday and a low of $48 midday Wednesday.

Today, WTI oil jumped 3.18% to $52.84 a barrel. Brent oil rose above the $60 mark for the first time this year, up 3.78% to $61.52.

Energy has been the third-best performing sector on the S&P 500 this week, behind consumer discretionary and consumer staples. It's up 1.57% through Friday morning. It has risen 3.7% in the last two days alone.

Even as the current price of oil per barrel is rising, Wall Street firms keep releasing bearish outlooks. In a forecast Monday, Citigroup Inc.'s (NYSE: C) Global Head of Commodity Research Ed Morse reported the recent surge in oil prices is nothing but a "head-fake." He said oil may plummet another 60% to $20 a barrel.

Citi reduced its annual Brent crude forecast for the second time this year. According to Morse's report and Bloomberg, oil prices in the $45 to $55 range are unsustainable and will cause a "disinvestment from oil." He says prices will average $54 a barrel in 2015.

But as our energy expert Dr. Kent Moors explains, here's what these analysts misunderstand about oil…

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Why Citi Is Wrong About the Price of Oil Per Barrel

Oil demand continues to climb at a steady pace. The International Energy Agency (IEA) projects global oil demand will jump from 910,000 barrels per day this year to 1.13 million in 2016. That massive 24% increase will keep the price of oil per barrel steady.

"Yet the doomsayers respond that there is still considerable volume available from ongoing existing projects," Moors noted. "But, as usual, they miss the governing factor. The continuing volume from existing projects is already factored into a market where demand is not collapsing."

That means stockpiles in places like Cushing, Okla., won't be a factor moving forward. In the months ahead, arbitrage will bring the market back to its right state of balance.

"Yes, this is a "brave new world" of oil," said Moors. "Yes, the factors colliding are operating in new ways. But it's still the trade in oil that determines the price.:

That's why the price of oil per barrel is steadying.

"The trajectory now clearly indicates a new medium-term floor in the mid $50s in New York and about $60 in London," Moors said Tuesday. "By the fourth quarter of this year, oil prices will likely trade even higher, somewhere in the $70s."

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Agree that demand is growing and that the oversupply margin is thin and will shift back to demand imbalance when production levels off. But Baker Hughes rig count data suggests it's correct that rig count is lowest in a decade.

The market has been consistently oversupplied for several years but prices stayed high until mid 2014 because prices were set in the futures markets as speculators and major investors bought oil as a money substitute as the central banks printed money. However, that trade stopped working for a couple of years because the physical market did not support it and eventually the fundamentals came home to roost.

The market may be approaching balance, but it's not there yet, and as always, the supply and demand for futures will set the market price, not the supply and demand of physical. As we all know, the futures markets often have nothing to do with economic fundamentals. They can remain divorced from reality for a long time.

The best way, perhaps the only way to trade these markets is through technical analysis. There's a reason commodity traders trade the charts. The fundamentals of supply and demand in the cash market are important for context, but they don't set the price. Knowing that the futures markets have mispriced reality is not enough. Timing is everything.

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